A tankless water heater can cost 1 ½ to 2 times more than a traditional storage-tank heater. Changing from a storage-tank heater to a tankless heater is more complicated than just switching out the tanks. In most cases the tankless water heater will required modifications to the existing venting system pipes. Some also require larger gas lines or a new 120-volt electrical outlet. This can add significant cost to the water heater.
Tankless water heaters are more energy efficient, but savings won’t be seen for years. A tank water heater is around 60 percent efficient while a tankless heater is often around 80 percent. This can save you around $100.00 per year based on several studies. If you are paying an extra $1,000.00 or more for a tankless water heater, it can be well over 10 years before you see any savings. Some studies have shown a higher amount of hot water being used by the families with tankless water heaters because of the “endless” supply of hot water. Dads no longer need to tell their teenage daughter to get out of the shower before they use up all the hot water (if only I was so lucky).
Tankless water heaters require more care. With the hard water we have in the Phoenix area, scale build-up is a big concern. Calcium build-up can reduce water flow, decrease efficiency and greatly reduce the life expectancy of the unit. For this reason I recommend adding a water softener system. Most manufactures will also recommend servicing the unit once a year.
I think tankless water heaters are great. I performed a new home inspection for a client in Gilbert, AZ that the builder installed a tankless water heater as part of their energy efficiency package. If you want an unlimited supply of hot water, tankless water heaters are great. As I told my client; If I had to choose between two identical houses, one with a traditional tank water heater and one with a tankless, I would go with the tankless. But if I had to replace my existing tank water heater, I would replace it with another tank water heater.